Mechanism Design Theory

Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson: Mechanism Design Theory

I have been unable to download this, as the link doesn’t work for me. The ‘public’ version is:

The Prize in Economic Sciences 2007: Information for the Public: Asymmetric Information and Economic Institutions The Royal Swedish Academy of Sciences Sun. 7 Feb 2021

An important goal of economic theory is to understand what institutions, or allocation mechanisms, are best suited to minimize the economic losses generated by private information. …

Concluding remarks

… markets in general, and auctions in particular, can be efficient institutions for the allocation of private goods. …

Whereas the study of optimal trading institutions is one important application, mechanism
design theory has a much broader scope, and it has been used to sharpen the analysis of many
other issues in economics and political science. For example, the theory admits a sophisticated
analysis of institutions for the provision of public goods, of optimal forms of regulation, and
of voting schemes. For a discussion of these and other applications, we refer to our scientific
background article (as above).

My Comment

Notice that efficiency is only considered in terms of assumed valuations by ‘homo economicus’. Longer-run effectiveness – in so far as it goes beyond efficiency – is out of scope, although Myerson has been reported as seeming to think the distinction unimportant.

Dave Marsay

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